However, they’ll need to prove it. Powerful interest groups say insurers have little experience with these patients and worry that MCOs will shortchange members.

John Carroll

Back in January, Massachusetts officials laid out some thoughts on how they could better coordinate care for people with dual eligibility, the poor and often seriously disabled population that can qualify for both Medicaid and Medicare. Encouraged by federal authorities to think outside the system, state officials focused on a chance to improve the care that these people receive while lowering costs by contracting with insurers, provider networks, accountable care organizations, and others that could create “integrated care organizations” and earn money on a capitated fee.

In the view of state officials, Massachusetts’s 115,000 people ages 21 to 64 with dual eligibility could be assigned to a plan, but would have the right to opt out. In mid-November, the state signaled it was preparing to petition the federal government for the right to push ahead with the plan as another 14 cash-strapped states hatched their own proposals for people with dual eligibility. Allies and opponents are arraying themselves along the front lines in one of the most contentious issues in managed care.

Managed care companies, including UnitedHealth, have been champing at the bit for more than a year, arguing that plans are ideally suited to bringing together teams of health care providers to manage these patients. Skeptics, though, including powerful lobbying forces at the AARP and Families USA, see the potential for some MCOs to pay less attention to patient care than to their bottom line, with patients suffering in the tug-of-war between cost efficiencies and care mandates.

There is one point about this movement that just about all parties agree on: Caring for people with dual eligibility is one of the most expensive and daunting tasks in health care.

The Centers for Medicaid & Medicare Services has gathered figures demonstrating that people with dual eligibility make up only 16 percent of all Medicare members but account for 27 percent of the program’s expenses. On the Medicaid side it’s even worse, with people with dual eligibility totaling 15 percent of enrollees and 39 percent of costs. A solid majority suffer from multiple comorbidities, a well-known multiplier on the cost side. And 43 percent have a mental or cognitive impairment that further complicates care.

Add it all up, notes Emory University health care economist Ken Thorpe, and the country’s 9 million people with dual eligibility will use up $230 billion in federal funds this year alone.

Experts in the field also note that there’s some low-hanging fruit for efficiency experts to gather. One of the most frequently cited opportunities: a nursing home gambit in which patients repeatedly go through a revolving door to the hospital and back to the nursing home, which collects a higher Medicare payment for the first 100 days before the duals are covered on the lower Medicaid rate. The more round trips they engineer between the nursing home and the hospital, the better able they are to reap consistently high rates.

$1 billion handed out

For federal officials, the issue came to a head during the health reform debate. Better management of people with dual eligibility is essential to the Obama administration’s goal of reining in health care costs. So the administration handed out $1 billion to 15 states to study how best to handle this population. That prompted Massachusetts, under Democratic Gov. Deval Patrick, to turn to managed care solutions that offer to coordinate care and integrate coverage. Shifting people with dual eligibility from the fee-for-service system to managed care plans would save 2 percent of its $4 billion budget, according to state estimates. Other states have been studying the math.

Who’s best qualified?

Last year Simon Stevens, chairman of the UnitedHealth Center for Health Reform & Modernization, described a potential $1.6 trillion in savings over 25 years if the intensive care needed for people with dual eligibility could be better coordinated. UnitedHealth sees a direct role for itself in a field it’s been active in for some time. “Clearly we have been working with states and the federal government for many years in both the Medicare & Medicaid populations and have experience with duals,” says Tyler Mason, a spokesman for UnitedHealth.

Last September, Thorpe put together a report for America’s Health Insurance Plans outlining how health plans are best situated to employ evidence-based care models to trim billions in unnecessary costs.

“Assuming states enrolled all people with dual eligibility into team-based care models, federal savings over the next 10 years would total $125 billion — clearly an upper estimate,” Thorpe wrote. “States would save approximately $34 billion in Medicaid spending over the same 10-year period. These totals would be more consistent with a policy that would require people with dual eligibility to enroll in health plans and other care models. Use of opt-outs or other voluntary approaches would generate lower savings.”

Thomas Johnson, CEO of Medicaid Health Plans of America, dangled $148 billion in projected savings in front of the congressional debt-reduction “supercommittee” recently, claiming that “combined payments would reflect anticipated savings achieved through a fully integrated program and states would be allowed to retain a portion of any realized savings to encourage their participation.”

AHIP and its allies, though, find themselves lined up opposite a powerful alliance of patient advocacy groups who are digging their heels in hard against any sudden, wholesale shift to managed care.

“It’s not that we are opposed to managed care in all circumstances for people with dual eligibility,” says Marc Steinberg, deputy director of health policy at Families USA. “It is a tool in the toolbox. But it has to be done carefully.”

People with dual eligibility are among the sickest of the poorest members of society, says Steinberg. “They don’t have the ability to handle change very well, so you have to build in protections.” Not all health plans looking to jump into the game have the experience or strategic focus that would make them good at it, he says.

“We get very nervous when we see large managed care companies with no experience saying ‘Gosh, this looks like a very profitable line of business,’” says Steinberg.

One of the most outspoken opponents of handing Medicare money over to states to use for people with dual eligibility is Judy Feder, a noted professor of health policy at Georgetown University and a patient advocate at the Urban Institute.

“Our concern is that states would require enrollment, and it’s unreasonable to have Medicare beneficiaries give up their Medicare right to choose their providers,” says Feder. There’s no broad evidence available to show that managed care plans in general are able to deal with this population.

Some groups, like Commonwealth Care Alliance, a not-for-profit organization that offers medical team support for very sick old people with dual eligibility around the clock, have done exceptionally well at reducing the hospitalization rate — one of the biggest areas for savings, says Feder. But where’s the evidence that suggests that the average managed care plan can do the same?

Movement in the Bay State

Back in Massachusetts, advocates have managed to resolve some of the worries of provider groups. State officials have publicly assured providers that the new integrated care organizations would be able to negotiate provider rates. They would presumably start around Medicare levels and could rise above that, making physicians and hospitals much more supportive of the state’s proposal.